February, 2014 www.astlelaw.com
Kansas Bankruptcy News
A monthly publication for the non-bankruptcy attorney prepared by the Law Office of
Donald C. Astle, Donald C. Astle and Sheila Maksimowicz Attorneys at Law.
345 Riverview Suite 730,Wichita, KS
The "Retainer" and "Fee Advance" in Bankruptcy

     In Kansas there is rarely any such thing as a “non-refundable retainer.” An attorney can take a fee advance but must generally hold the fee in the trust account and account for how it is used. KRPC 1.16(d), see “Statute of the Month” below. For example, if you receive a $2500 fee deposit for a new divorce client you draw from it on a regular basis and account to the client, typically through a monthly billing report. It may be several months before the fee advance is expended. But it’s still the client’s money until expended.
     If an attorney gets a fee advance but the client also needs a bankruptcy, is the unused fee advance in the divorce attorney’s trust account exempt in bankruptcy? No. It’s just like money on deposit in a bank account. It’s not exempt and can be taken by the bankruptcy court. It’s a dilemma when the client is in need of divorce and at the same time needs a bankruptcy. There needs to be close coordination between the divorce attorney and the bankruptcy attorney.
     There is a difference in the rare case when the fee payment is a true retainer. A true retainer is where the attorney is paid to be available for a potential legal need whether that need arises or not. For example, if your the only water law attorney within 200 miles of Rustwater, Kansas and receive a payment from a client to be available for an anticipated future water law case, then the service has been purchased and provided. That is, being exclusively available for that client’s water law representation. You would likely have to provide the rationale and basis for the non-refundable retainer, but it is still entirely different than the fee deposit for the divorce.
     Though entirely different than the “retainer” or “fee advance” the subject that often comes up in the situation where a divorce attorney has been paid a substantial amount of money prior to a bankruptcy is the “preference” problem. The preference statute is a little lengthy to quote here but basically it says if a creditor has been paid $600.00 or more on an old debt within 90 days prior to filing bankruptcy, the court can require that money to be turned over to the bankruptcy court for redistribution to all creditors. This is probably an over simplification of the preference law but it does cover the all too common case where a divorce attorney has her client “clean up” the old divorce bill of $1,000 before sending the client on to file bankruptcy. So if you have to pressure your client to “clean up” the old divorce bill before referring to the client for the desperately needed bankruptcy, be careful. Now if the $1,000 was for current services, say you bill once a month and the client pays promptly thereafter, then you are very likely OK as this would be an exception to the preference rule as it would be considered a regular payment on a current account.
KRPC Rule 1.16(d)
Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client’s interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned. The lawyer may retain papers relating to the client to the extent permitted by other law. Itallics added.
     A lot for 2014! So, we’ve expanded it for this month and left out some of our other regular features. A new client can now make an appointment online with direct access to the attorney’s schedule. This is not an e-mail request for an appointment. It’s the appointment. The scheduling service is available 24/7.
     After the first appointment the client then fills out a bankruptcy questionnaire, lists all bills, and gathers the documents we need. This can now be done online. The client can fill out the questionnaire, list creditors, and provide documents all through our secure website. After this is done, the client
JP...The Legal Cartoon
Copyright David Carter used with permission.
sets a second appointment to go over all of this. Again, this appointment can be scheduled online, 24/7.
     The final bankruptcy petition to be filed with the court can be e-mailed to the client for final approval. Also, payment of fees can be made online. As always, whether the client sets an in-office appointment or phone appointment, the appointments will always be with an attorney -- not a secretary or paralegal. Bottom line -- a client can literally file a bankruptcy without ever leaving home. This is quite a benefit for the client out of town who does not want days and days of delay with mail going back and forth.
Serving Kansas since 1984, The Law Offices of Donald C. Astle practices exclusively in consumer bankrupcy and collection law. No other cases are accepted.

Visit our website at www.astlelaw.com
Sheila C. Maksimowicz
University of Kansas, 1980
Donald C. Astle
Washburn University, 1984